Conservative FIRE

I was reading through a thread on Facebook today about a couple who decided to retire in their early fifties on less than a million dollars. While this may sound fine to most, I couldn’t help but thinking, for myself, that this would never fly. LeanFIRE sounds way to risky to me. But as I think deeper, I wonder if our acronym love is often misplaced. I consider myself a fatFIRE devotee, but does that really make sense? Though you can define this concept in various ways, I certainly am not living the life of excess that this term implies. In fact, I am still relatively cost sensitive and frugal. I still work and get a W2 salary. There is no “fat” in my lifestyle. Nor do I think there is in most others. What we really are is conservative FIRE.

We are conservative when it comes to finances. We save much more than we spend, and accrue large nest eggs. It’s not about luxury. We do it as a means to risk mitigation.

So what are the hallmarks of conservative FIRE and why is this term more fitting than fatFIRE?

SWR Nonsense

There is endless debate about the safe withdrawal rate. I think even the experts would tell you that 4% is reasonable, especially if you plan to be agile during retirement. 3.5% is hedging your bets. Yet most conservative FIRE advocates are pushing down towards the 3% level. Some even call for lower.

This is ridiculous. Barring catastrophe (world economic decimation in which we all fail), there is no way such low withdrawal rates are going to be necessary.

We are saving, not to live some mythic fatFIRE existence, but rather to ease our own anxieties about the uncontrollable. We are highly risk averse.

In my book, this is just fine.

Budgets Are Pervasive (And Sexy)

I hear about people touting the fatFIRE lifestyle all the time. Yet I rarely see people in our community living it. We don’t spend like there is no tomorrow. We rarely splurge. And most importantly, we aggressively budget even when we have more than enough.

Sure the spreadsheets may no longer come out every month, but the frugality hacks and money saving techniques are inbred. How many people have millions of dollars in the bank, a safe withdrawal rate far below 4%, and yet still spend time and energy chasing travel rewards to save a few thousand dollars? How many still drive around in old beat up cars that their neighbors are embarrassed of?

Why do they do it?

They do it because they are conservative FIRE. They want their money to last.

Opportunity Cost

I think the concept of opportunity cost is overplayed. Certainly this should be the last thing on the mind of a true fatFIRE advocate. When you have enough money, passing up on a chance to spend can often be a lost opportunity.

Listen, it serves no one to be the richest person buried in the cemetery. We know this. Yet it doesn’t stop us from pausing before making a big purchase, and wondering what that money could do in an index fund compounding over the next decade.

As long as that thought crosses your mind, your are conservative FIRE, not fatFIRE.

And that’s Okay!

Final Thoughts

The term fatFIRE sounds cool and hip. It’s fun. But it certainly does a poor job describing the reality of many of those in our community. A better descriptor is conservative FIRE. We have set our safe withdrawal rate way too low, we continue to budget without the need, and we fret over opportunity cost.

There is nothing wrong with us. It is who we are.